Dangote Petroleum Refinery has announced a reduction in the ex-depot price of Premium Motor Spirit (PMS), commonly known as petrol, from N950 to N890 per litre, effective Saturday, February 1, 2025. This price adjustment follows favorable developments in the global energy sector, including declining crude oil prices.
The reduction is part of a broader strategy to increase the availability of refined petroleum products in Nigeria. The Dangote Refinery, which began operations in 2024, is ramping up its supply to the Nigerian market. By enhancing domestic production capacity, the refinery is helping reduce Nigeria’s reliance on imported refined products. As supply increases, it is expected to drive greater competition among fuel marketers, potentially leading to lower pump prices nationwide.
Rewane: Market Forces to Determine Pricing
Bismarck Rewane, Managing Director of Financial Derivatives Company Limited, has provided key insights into the refinery’s impact on the Nigerian market. According to Rewane, while Dangote’s increasing supply will boost availability and potentially stabilize prices, fuel pricing will still be subject to market forces.
“Pricing is not necessarily in the hands of Dangote Refinery but in the hands of the market,” Rewane noted, emphasizing that global crude prices and refining costs will continue to play a role. He also stressed that the refinery is a profit-driven enterprise and will operate with a focus on sustainability: “Nobody goes into business to sell below its cost price; that is suicide.”
Easing Inflationary Pressures
Anthony Chiejina, Group Chief Branding and Communications Officer of Dangote Refinery, emphasized that the price reduction aligns with President Bola Ahmed Tinubu’s economic recovery plan. This plan aims to reduce Nigeria’s reliance on fuel imports, lower inflationary pressures, and improve the overall cost of living by making Nigeria a hub for refined petroleum products.
Rewane echoed these sentiments, predicting significant benefits to other sectors of the economy. He highlighted that increased domestic refining would reduce transportation costs, lower diesel prices, and potentially improve the naira’s stability by enhancing Nigeria’s trade balance. According to Rewane, the price of diesel, currently around N1,500 per litre, is expected to drop below N1,000 due to the refinery’s operations.
Ending Dependency on Imports
With Dangote Refinery increasing its output, the era of heavy reliance on imported refined products is gradually coming to an end. The Nigerian National Petroleum Company (NNPC) previously raised fuel prices in 2024 as part of the government’s decision to eliminate costly subsidies. This shift to market-driven pricing aimed to promote local production and investment in Nigeria’s refining infrastructure.
Rewane’s analysis underscores that while Dangote Refinery is positioned to transform the country’s energy landscape, broader economic factors will continue to influence pricing trends. However, with increased competition and supply, Nigerians could see more price stability and relief at the pump in the coming months.
